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To get ahead, corporate America must account for climate change–John Reilly

May 30, 2017 – 9:37 am

MIT Sloan Senior Lecturer, John Reilly

From The Hill

Scott Pruitt’s confirmation last week as chief of the Environmental Protection Agency was a setback for environmentalists and scientists who waged a fierce campaign against the nominee.

As Oklahoma’s attorney general, Pruitt led or took part in 14 lawsuits that sought to block EPA regulations and policies intended to tackle climate change. In addition, his views on global warming put him at odds with both the stated positions of many companies and their current policies toward climate change.

Pruitt is one of many announced appointees who is hostile to efforts aimed at reducing emissions linked to global warming. Many in the administration are skeptical that climate change is caused by human activity or doubt its consequences will be significant. President Trump has expressed extreme skepticism about climate change, calling it a hoax created by China.

Despite the skepticism from the administration, most industry leaders fully accept that climate change is real and is caused by humans. Crop production is shifting. Extreme events, such as heavy precipitation, droughts, and more powerful tropical storms, are more common or happening in places that normally wouldn’t see them.

Extreme heat waves are imperiling people around the world and affecting the productivity of those who must work outdoors. Drought, heat, and pests are damaging forests and setting the stage for wildfires. Moreover, global sea levels are rising.

No matter what the White House says, corporate America cannot escape the effects of climate change. These changes can threaten supply chains; affect location decisions should key resources become scarce; damage important infrastructure, such as electricity, transportation and communication systems; threaten workers’ health; or shut down local economies for extended time periods during extreme weather events.

Most nations, including key U.S. trading partners (Canada, Mexico, Europe), are proceeding with policies designed to mitigate greenhouse gases. Exported U.S. products from a revamped U.S. manufacturing sector will need to meet these standards and compete in places with carbon pricing or other regulations that favor low-carbon technologies.

An innovative corporate America, along with the rest of the nation, can benefit from developing low-carbon technologies and other greenhouse gas-reducing options. China has aggressively moved to develop its manufacturing capability for wind turbines, photovoltaics, and nuclear power.

Is this altruism on the part of the Chinese, with these technologies aimed at its domestic market, or a realistic evaluation of the global demand for clean energy that can create new export markets? My guess is the latter, not the former.